October 24, 2019 | 4 min read
Maximize savings, productivity and systems with e-Procurement.
If the thought of staff learning a new, complicated system makes you shutter; take a deep breath. e-Procurement tools are actually a benefit to suppliers, procurement departments, and the company itself. Today automated procurement software permeates the procurement life cycle in the most highly successful companies around the world. In Deloitte’s 2018 global chief procurement survey it was reported that 61% of the top procurement leaders experienced considerable year to year cost savings when moving to an e-procurement process. So, don’t be behind the ball. Modernize and streamline your procurement process. The list below will give you a better understanding of what automated software can do for you and will have you seeing e-procurement as a necessity.
Naturally, at the top of the list is cost efficiency. All companies want to know, “Will it save me money?” The answer is, yes e-procurement will save you the money you are wasting on paper-based systems. Out of 504 procurement leaders worldwide, 78% enacted an automated procurement system to capitalize on cost savings (Deloitte). E-procurement produces cost savings through overall time reduction during the procurement life cycle, declines in human errors, increases in reputable supplier selection, boosts in supplier relationships, opportunities for cost savings through reverse auctions, the benefit of leveraging volume buying, the prevention of maverick spending, and stopping unnecessary spending associated with paper-based systems (for example, stamps to mail paperwork… not to mention paper itself).
When using e-procurement tools, the whirlwind of paperwork as you dig through a filing cabinet is replaced with electronically stored records. Electronic records keep your company information safe from accidental damage or loss and are accessible with the click of a mouse; with the ability to reference information at a glance. Not only does the elimination of paperwork save you time, space, and money your company information is streamlined through your ability to make adaptable templates. The human errors present in traditional systems are prevented and staff productivity is increased through time-saving templates.
The old saying ‘time is money’ is still true today. E-procurement is less time consuming than traditional procurement processes, helping staff accelerate the procurement life cycle through automation. The tedious tasks of 3-way matching, ordering products/services, processing deliveries, and payments happen in a matter of minutes. Thirty-three percent of procurement leaders tout that e-procurement systems enable their staff to work on more strategically significant functions and tasks (Deloitte). Staff also stay structured and accurate by staying on top of deadlines, as a result of the instant notifications e-procurement systems provide. The standardization of your procurement system establishes happier, more productive employees.
Even through the use of templates e-procurement can be used to suit individual suppliers or company needs, but still maintain standardization through approval processes and formal workflows. Everyone will know what to expect during the procure to pay process and become more efficient when ordering, delivering, and paying for products/services. Routine orders and shipments can even become automatic, giving both parties the ability to focus on higher needs, expenditures, price points, and market trends. The controls put into place also lead to the ability to monitor cash flow through visible spending practices within the e-procurement process.
Electronically handling your procurement life cycle makes it easier to run, track, and analyze spend reports. You can ensure staff are spending in the correct areas, the right amounts, and eliminate unnecessary spending. Unnecessary spending is called “maverick spending” and can be as much as 29% to an appalling 80% of a company’s total spend (The Hackett Group). Additionally, the transparency e-procurement provides helps you identify company fraud and steers you clear of violating compliance standards.
Companies that stick by their “tried and true” manual procurement systems run a higher risk of non-compliance. It is hard to perform due diligence at each stage of the procurement life cycle, but an automated system is rule-based, follows systematic workflows, and prevents erroneous/incomplete requisition orders from going through - eliminating the chance for compliance risks. Not only can compliance be threatened by mistakes, but company fraud endangers compliance as well as cost savings. In a global study done by the Association of Certified Fraud Examiners (ACFE), it was estimated that most companies lose 5% of their annual revenue to fraudulent claims on requisition orders. Using automated systems can help you avert misrepresentation, keep your company clear from compliance violations, and give you a reputable reputation.
Not only will suppliers want to work with you; web-based procurement allows you to search for suppliers worldwide. This means you have a wider selection of products and services available at either lower prices or when items are not available locally. Suppliers will also compete for your business through e-procurement’s reverse auction software.
Outlined above are the 7 reasons e-procurement is a company necessity. To start experiencing company cost savings, faster procurement life cycles, more productive staff, happier suppliers, and undoubted compliance request a demo of ProcurePort’s software today.